Silicon Valley Bank’s annual Startup Outlook survey provides insight into how startups in the UK, US and China are feeling about the year ahead. The 2016 report finds that while startups across the globe are eternally optimistic, they are preparing for a new reality. Learn more about the Startup Outlook Report and view the US and China reports at www.svb.com/IEO.

1. Innovation Economy Outlook 2016 1
U.K. STARTUP OUTLOOK 2016
UK startups prepare
for a new reality
Innovation Economy Outlook 2016

2. Innovation Economy Outlook 2016 2
We are pleased to present Startup Outlook 2016, Silicon Valley
Bank’s annual report on the health of the innovation economy.
For each of the past seven years, we have taken a survey of
companies to learn what entrepreneurs are thinking about
business conditions, access to capital and talent, and the policy
issues that help or hinder their success.
This year, we are drawing on responses from more than 900
technology and life science executives, and for the first time
we expanded the survey to China. SVB conducted the survey
portion of the report in December 2015, just as significant
market volatility was taking hold. They say timing is everything,
and in the past several weeks it has become apparent that
entrepreneurs’ perceptions at the end of 2015 had already
shifted by mid-January.
The public conversation about 2016 is filled with doom and
gloom about the innovation sector, with exaggerated predictions
of the death of unicorns, a funding crisis and lackluster results
all around.
At Silicon Valley Bank, we see it differently. We think it’s a
healthy recalibration but it doesn’t mean it’s going to be easy
for entrepreneurs.
Valuations were high, now they are coming back to earth.
Growth at any cost is being replaced with a focus on
profitability. Companies were priced for perfection, and
we may see some stumble or even go out of business.
Entrepreneurs we speak with, while remaining naturally
optimistic, are adopting a new attitude: Be prepared. They are
pulling the reins tighter on operations and retooling strategies.
They are anticipating a more balanced funding environment.
They are considering M&A an even more viable exit strategy.
In 2016, access to capital will get harder. But it’s not supposed
to be easy, and there will be opportunities for good companies
with good ideas. That’s healthy.
Thank you for taking a look at this report. We hope the findings
can be useful as you chart your own path or follow this sector.
Looking globally, the opportunities for innovation are abundant.
Entrepreneurs are strong-willed men and women who want to
have a positive impact on the world. That’s never going to change.
Greg Becker
President and CEO, Silicon Valley Bank
Letter from SVB’s CEO

3. Innovation Economy Outlook 2016 3
After record levels of investment in 2015, UK startups are
retooling strategies for a shifting economic environment,
according to Silicon Valley Bank’s annual outlook survey
of technology and life science executives. Startups are
saying no to a British exit from the EU (Brexit) and are
planning to hire—but they expect that finding the right
talent will continue to be difficult. An increasing number
of businesses will pursue venture capital funding in
2016. As they plan their growth strategies, executives
are being cautious. International market volatility and
a tough start to the year have everyone keeping a close
eye on what’s next.

4. Innovation Economy Outlook 2016 4
BUSINESS CONDITIONS
Startups temper their positive outlook
Fifty-eight percent say business conditions will be better than 2015. That said, it represents a 21 percentage
point drop over the last two years. Unbridled optimism has been replaced with rational restraint. “Startups
focusing on solving real problems will succeed regardless of wider market perceptions,” a London medical
devices executive said.
Describe your outlook
on business conditions
for your company this
year compared to last.
“There may be a valuation
correction but the fundamentals
are sound.”
– Healthcare executive, London
Will be better
Will stay the same
Will be worse
79%
19%
68%
29%
58%
41%
2% 3% 1%
20152014 2016

5. Innovation Economy Outlook 2016 5
British startups oppose leaving the EU
Three-quarters of UK startups said that leaving the EU would have a negative effect on their business. “Leaving
the EU would significantly reduce U.S. investment and jobs in the UK as they transfer their business to other EU
countries,” a London hardware executive said.
UK fintech businesses think Europe holds the key to expansion, which could explain the lack of support for a
Brexit. One fintech executive warned that “geopolitics can overshadow business matters in Europe.” Six percent
of executives said the impact would be positive.
Were the UK to leave
the EU, what would
the effect be?
Among the UK executives surveyed,
72% said leaving the EU would have
a negative effect on their business,
up from 64% the previous year.6%
Positive
effect
72%
Negative effect
22%
No effect

6. Innovation Economy Outlook 2016 6
FUNDING
Raising capital continues to be challenging
Most UK executives (80 percent) said that the fundraising environment is extremely or somewhat challenging, and
25 percent named access to financing their biggest challenge. Raising money is always challenging, and tightening
capital requirements often lead to healthier, more sustainable companies.
What is your view of
the current fundraising
environment?
Among the UK startups surveyed,
80% believe the fundraising
environment is challenging.
20152014 2016
Extremely
challenging
Somewhat
challenging 63%
61%
25%
69%
18%14% 11%
Not
challenging 19% 20%

7. Innovation Economy Outlook 2016 7
Venture capital remains startups’
top funding source
Survey respondents said they plan to seek venture capital over other funding sources. Forty percent of
executives expected venture capital to be their next source of funding, with angel investment and private
equity a distant second. We expect that venture fundraising will become more challenging in 2016 but that
VC investment activity will remain healthy.
What do you expect your
company’s next source
of funding will be?
Forty percent of UK innovation
executives expected venture capital
to be their next source of funding.
Angel/Micro VC 16%
Private equity 13%
Bank debt 8%
Venture capital 40%
IPO 5%
Other 18%

8. Innovation Economy Outlook 2016 8
More startups plan to be acquired than to go public
Acquisition eclipsed IPOs as the preferred exit strategy of entrepreneurs. Of the UK executives surveyed,
59 percent said their long-term goal is to be acquired, compared with just 17 percent who seek an IPO.
59+17+20+420%
Stay
private
4% Don’t
know
59%
Acquisition
17%
IPO
What is the realistic
long-term goal for
your company?
Acquisition is the long-term goal
of 59% of the UK startups surveyed.
Just 17% are aiming for an IPO.

9. Innovation Economy Outlook 2016 9
Innovators expect MA to stay strong this year
A majority of startups said they expected the number of acquisitions to grow or stay the same. Many tech IPOs
faltered in 2015, making MA a more viable exit option. Also, reduced valuations make acquisitions more
attractive for top acquirers that have plenty of cash on hand to make significant purchases.
Fewer
acquisitions
No change
More
acquisitions49%
17%
34%
How do you think the
MA market will change
over the next 12 months?
Of those surveyed, 83% said they
expected acquisitions to equal or
exceed those in 2015.

10. Innovation Economy Outlook 2016 10
It’s hard to find the right talent
Ninety-five percent of executives said it’s challenging to find people with the skills necessary to help grow their
businesses—up 6 percentage points since 2013. After years of increasing difficulty finding the right talent, it’s
possible that the talent crunch has reached its peak and the very tight labor market may loosen. Even so, finding
employees with the right skills will remain difficult in an overall environment of low unemployment rates.
How challenging is it to
find workers with the
skills necessary to grow
your business?
Ninety-five percent of UK
entrepreneurs say it’s challenging
to find the right talent, up from
89% in 2013.
201520142013 2016
Respondents
who say finding
talent is
challenging
94%
89%
95% 95%
HIRING TALENT

11. Innovation Economy Outlook 2016 11
WOMEN IN TECH
Startups have few women in leadership positions
It’s well documented that women are underrepresented in leadership positions: 61 percent of UK startups have
no women on their boards, and nearly half (47 percent) lack women in executive positions. Just 15 percent say
they have programmes in place to increase the number of women in leadership roles. Creating more diversity
in the top ranks of all companies is an imperative, and the dialogue on how to make it happen needs to continue.
How many women
are in leadership
positions within
your company?
Almost two-thirds of UK startups
don’t have any women on their
boards, and 47% have no women
in executive positions.
66+3447+5339%
At least one
woman
Women on
the board
Women in
executive positions
61%
No women
53%
At least one
woman
47%
No women

12. Innovation Economy Outlook 2016 12
PUBLIC POLICY
Lack of skilled workers hurts the bottom line
Of the leaders surveyed, 26 percent said recruiting is their biggest challenge. Half of the respondents said they’re
looking for sales skills, while engineering and technical skills, product development, and marketing skills are
also critical needs in 2016. The lack of skilled workers creates measurable business impacts, such as inhibiting
product development, making it harder to scale operations and inhibiting revenue growth.
How has the lack of
access to talent affected
your company?
Innovation executives said the lack
of skilled workers inhibited product
development and made it difficult to
scale operations.
Made it more
difficult to scale
operations
Inhibited product
development
Inhibited
revenue
growth
29%
42%48%
Note: Respondents were given the opportunity to select multiple responses.

13. Innovation Economy Outlook 2016 13
Access to talent is the No. 1 policy issue for startups
Nearly 60 percent of survey respondents said that access to talent is the most important public policy issue on
their mind. “Access to foreign talent and [the] ability to bring people into the UK is the key,” a London fintech
executive said. International trade, cybersecurity, consumer privacy regulations and use of independent
contractors were also key policy issues.
What are the most
important public
policy issues affecting
companies like yours?
UK startups say access to talent is the
most important policy issue, followed
by international trade.
1. Access to talent 57%
2. International trade 40%
3. Cybersecurity 29%
4. Consumer privacy regulation 28%
5. Employees vs. independent contractors 24%
Note: Respondents were given the opportunity to select multiple responses.

14. Innovation Economy Outlook 2016 14
15%
Industry sector Profitable
45% Yes
55% No
Ownership
68%
Technology
(net)
15%
Healthcare
(net)
17%
Other
Revenue stage
92%
Private
8%
Public
48+52+x
50%
35% Pre-revenue
Up to $25 million
in revenue
More than
$25 million
in revenue
Total
respondents
929
Primary place of business
70%
U.S.
8%
U.K.
15%
China
7%
Other
About the Startup Outlook 2016 survey
Our seventh annual survey of technology and healthcare executives offers insight into what’s on the minds of innovation
leaders today. For this year’s survey, we received more than 900 responses, covering such topics as how innovation
companies are faring, hiring projections and how government policies are affecting business growth.

15. About Silicon Valley Bank
For more than 30 years, Silicon Valley Bank (SVB) has helped innovative companies and their investors move bold ideas forward, fast. Silicon Valley
Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB). With commercial, international and private banking services, SVB helps
address the unique needs of innovators. Forbes named SVB one of America’s best banks (2015) and one of America’s best-managed companies (2014).
Silicon Valley Bank is the California bank subsidiary and commercial banking operation of SVB Financial Group (Nasdaq: SIVB) and a Member
of the FDIC. Silicon Valley Bank and SVB Financial Group are members of the Federal Reserve System.
Learn more at
svb.com/ieo
Silicon Valley Bank is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. FC029579. Silicon Valley Bank is authorised and regulated by the California Department
of Business Oversight and the United States Federal Reserve Bank; authorised by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited
regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Silicon Valley Bank is a subsidiary of SVB
Financial Group, a Delaware corporation and is an affiliate of SVB Financial Group UK Limited. SVB Financial Group UK Ltd is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR,
UK under No. 5572575 and is authorised and regulated by the Financial Conduct Authority, with reference number 446159. SVB Financial Group and its subsidiary Silicon Valley Bank are members of the Federal
Reserve System and Silicon Valley Bank is a member of the FDIC.
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and the chevron device are trademarks of SVB Financial Group, used under license.
A third-party firm, Peerless Insights Survey, conducted the Innovation Economy Outlook 2016 survey online on Silicon Valley Bank’s behalf from November 12, 2015, to January 6, 2016.
The material, including without limitation the statistical information herein, is provided for informational purposes only and is compiled from the survey conducted by Peerless Insights, a third-party source.
The material is based in part upon information from third-party sources that we believe to be reliable. However, the material has not been independently verified by us, and as such, we do not represent that
the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice, nor is it to be relied on in making an investment or other decisions.